Final Results - Part 2
Konami Co Ltd
16 May 2000
PART 2
4. Consolidated Financial Statements
(1) Consolidated Balance Sheets
(Millions of yen)
March 31,2000 March 31,1999 Year-on-year
Share of Share of Change
total assets total assets
ASSETS: (%) (%)
I Current assets Y 102,952 75.7 Y 80,796 68.8 Y 22,156
Cash and cash equivalents 58,780 23,526 35,254
Trade notes and accounts
receivable 27,203 31,941 -4,738
Marketable securities 0 1,563 -1,563
Inventory 11,393 14,119 -2,726
Prepaid expenses 1,635 1,243 392
Short-term loans - 7,442 -7,442
Deferred taxes 2,206 - 2,206
Other 2,223 1,689 534
Allowance for doubtful
receivables -491 -730 239
II Fixed Assets 32,666 24.0 36,583 31.2 -3,917
1. Tangible fixed assets 22,865 16.8 27,935 23.8 -5,070
Buildings and structures 11,305 13,780 -2,475
Machinery and transportation
equipment 252 262 -10
Tools and fixtures 2,818 2,934 -116
Land 8,488 10,881 -2,393
Construction in progress 0 76 -76
2.Intangible fixed assets 1,572 1.2 55 0.1 1,517
In-house software 1,485 - 1,485
Telephone line rights - 35 -35
Other 86 19 67
3. Investments and other assets 8,228 6.0 8,592 7.3 -364
Investment securities 820 174 646
Shares of subsidiaries 165 - 165
Long-term prepaid expenses - 1,337 -1,337
Lease deposits 4,703 6,808 -2,105
Deferred taxes 2,064 - 2,064
Other 474 271 203
Translation adjustments 461 0.3 3 0.0 458
Total assets Y 136,080 100.0 Y117,383 100.0 Y 18,697
(Millions of yen)
March 31,2000 March 31,1999
Share of Share of total Year-on-year
total liabilities and liabilities and Change
shareholders' equity shareholders' equity
(%) (%)
LIABILITIES:
I Current liabilities Y 46,646 34.3 Y 45,166 38.5 Y 1,480
Trade notes and accounts
payable 19,364 15,500 3,864
Short-term debt 2,774 4,521 -1,747
Current portion of straight
corporate bonds - 400 -400
Current portion of convertible
bonds - 5,367 -5,367
Current portion of long-term
debt 1,751 1,353 398
Accrued expense 3,750 2,967 783
Income taxes payable 11,435 8,455 2,980
Allowance for bonuses 1,158 1,072 86
Other 6,410 5,529 881
II Long-term liabilities 16,347 12.0 24,605 20.9 -8,258
Straight corporate bonds 10,000 15,000 -5,000
Long-term debt 4,788 7,415 -2,627
Allowance for directors'
retirement benefits 1,486 1,020 466
Other 72 1,169 -1,097
Total liabilities 62,994 46.3 69,771 59.4 -6,777
MINORITY INTEREST: 2,242 1.6 704 0.6 1,538
SHAREHOLDERS'EQUITY:
I Common stock 15,793 11.6 13,014 11.1 2,779
II Additional paid-in capital 15,516 11.4 12,726 10.9 2,790
III Retained earnings 39,565 29.1 21,511 18.3 18,054
70,876 52.1 47,252 40.3 23,624
IV Treasury stock -31 0.0 -344 0.3 313
Total shareholders' equity 70,844 52.1 46,907 40.0 23,937
Total liabilities, minority
interest and shareholders'
equity 136,080 100.0 Y 117,383 100.0 Y18,697
(2) Consolidated Statements of Income
(Millions of yen)
Year ended Year ended Year-on-
March 31, 2000 March 31,1999 year change
Share of Share of
Net sales Net sales
I Net sales Y 146,666 100.00 Y 113,413 100.00 Y33,253
II Cost of sales 90,755 61.9 75,029 66.2 15,726
Gross profit 55,911 38.1 38,384 33.8 17,527
III Selling, general and
administrative expenses 24,972 17.0 21,649 19.1 3,323
Operating income 30,938 21.1 16,735 14.7 14,203
IV Non-operating income 1,759 1.2 983 0.9 776
Interest and dividend income 139 141 -2
Gain on sale of
marketable securities 711 - 711
Gain on sale of treasury stock 213 - 213
Foreign exchange gains-net 194 337 -143
Rents income 160 202 -42
Other 339 302 37
V Non-operating expenses 1,594 1.1 1,541 1.3 53
Interest expense 340 488 -148
Devaluation of marketable
securities - 218 -218
Bond issuance expense - 91 -91
Bond interest expenses 384 327 57
Equity loss 44 - 44
Loss on retirement of Corporate
Bond 100 - 100
Other 724 414 310
Ordinary income 31,103 21.2 16,176 14.3 14,927
VI Extraordinary income 8,943 6.1 57 0.0 8,886
Reversal of allowance for
doubtful receivables 192 - 192
Gain on sale of fixed assets 63 57 6
Gain on sale of part of
subsidiaries' shares 7,021 - 7,021
Gain arising from changing in
subsidiaries' interest 1,665 - 1,665
VII Extraordinary losses 5,636 3.8 1,589 1.4 4,047
Loss on sale or disposal of
fixed assets 5,612 814 4,798
Loss on sale of investment 24 - 24
securities
Loss on disposal of inventory - 775 -775
Income before income taxes 34,409 23.5 14,645 12.9 19,764
Income taxes provision:
Current 16,433 11.2 9,326 8.2 7,107
Deferred -782 - -782
Minority interest income 414 0.3 214 0.2 200
Net income Y 18,344 12.5 Y 5,104 4.5 Y13,240
(3) Appropriation of Retained Earnings
(Millions of yen)
Year ended Year ended
March 31,2000 March 31, 1999
I Retained earnings at beginning or year Y 21,511 Y 17,855
Income taxes provision - deferred 3,447 -
II Increase from retained earnings 25 -
Increase by consolidating previously
unconsolidated subsidiaries 25 -
III Decrease from retained earnings 3,762 1,449
Cash dividends 3,560 1,058
Directors'bonuses 170 165
Decrease by consolidating previously
unconsolidated subsidiaries 4 225
Decrease by revaluation of real estate owned
by a U.K. subsidiary 28 -
IV Net income 18,344 5,104
V Retained earnings at end of year Y 39,565 Y 21,511
(4) Consolidated Statements of Cash Flows
(Millions of yen)
March 31,2000
I OPERATING ACTIVITIES:
Income before income taxes Y 34,409
Depreciation and amortization 2,477
Net loss on disposal or sales of fixed assets 4,410
Interest and dividend income -192
Interest expenses 763
Foreign exchange gain -194
Minority interest 44
Decrease in notes, accounts and other receivables 12,180
Decrease in inventories 2,726
Increase in notes, accounts and other payables 3,864
Other -2,196
Total 58,291
Interest and dividend received 185
Interest paid -762
Increase in income taxes paid -13,543
Net cash provided by operating activities 44,171
II INVESTING ACTIVITIES:
Proceeds from sales of marketable securities 1,462
Purchase of tangible fixed assets -2,004
Proceeds from sales of tangible fixed assets 136
Acquisition of additional shares of
affiliated companies, net of cash acquired 62
Purchase of investment securities -1,000
Proceeds from sales of investment securities 7,822
Other -5,272
Net cash provided by investing activities 1,206
III FINANCING ACTIVITIES:
Increase in short-term borrowings 38,517
Repayments of short-term borrowings -40,235
Proceed from long-term debt 412
Repayments of long-term debt -3,039
Redemption of staight corporate bonds -5,600
Cash dividends paid -3,547
Other 2,345
Net cash used in financing activities -11,147
IV EFFECT OF EXCHANGE RATE CHANGES ON CASH AND
CASH EQUIVALENTS -390
V NET INCREASE IN CASH AND CASH EQUIVALENTS 34,230
VI CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 23,517
Increase by newly consolidated company 8
V1 CASH AND CASH EQUIVALENTS, END OF YEAR Y 57,365
Summary of Significant Accounting Policies
1. Scope of consolidation
Consolidated subsidiaries 31
Companies included: Konami Computer Entertainment Tokyo Co., Ltd.,
Konami Computer Entertainment Osaka Co., Ltd.,
Konami Computer Entertainment Japan Co., Ltd.,
Konami Amusement of Europe Ltd.,
Konami of Europe GmbH.,
Konami of America, Inc., and 25 others.
Consolidation (New): Konami Nisshou-Bowl Entertainment Co., Ltd.
Konami Do Brasil Ltda.
Non-consolidatcd subsidiaries: 3 (Total assets, Net sales, Net income
and Retained earnings of the 3 non-
consolidated companies are immaterial and
had no effect on the consolidated
financial results)
2. Affiliated company applicable under equity method: Mobile21 Co., Ltd.
3. Fiscal year-end of consolidated subsidiaries
The fiscal year-end of all consolidated subsidiaries is the same as that of
the parent company (the Company).
4. Accounting standards
(1) Major evaluation methods of assets
Securities listed on stock exchanges ... Lower of cost or market, based
on moving average method.
Finished products, raw materials and work in process ... At cost, based on
the moving average method.
Work in process of goods under production is stated at cost, based on
the specific identification method.
(2) Depreciation of fixed assets
1. Tangible fixed assets ... Declining balance method, based on Corporation Tax
Law
2. Intangible fixed assets ... Straight-line method, based on Corporation
Tax Law
3. In-house Software... Staight-line method over 5 years
(3) Reserves
1. Reserve for bad debts ... As contingency for possible losses due to
default on payment of receivables, a certain amount for estimated bad
debt is set aside according to the Corporation Tax Law (legal transfer
ratio) or by independent judgement.
2. Reserve for bonuses... To provide for bonuses paid to employees, a
certain amount is set aside as part of estimated bonus payments for
the following term.
3. Reserve for directors retirement benefits...The liability for retirement
benefits represents accrued benefits for directors and corporate auditors of
the Company and is provided for at such amounts as would be required if all
such individuals retired at each balance sheet date.
(4) Deferred assets
1. Research and development expenses ... Charged to total income as incurred
2. Stock issue expenses ... Charged to total income as incurred
(5) Comsumption tax
In principle, consumption tax witheld by the Company on the sale of goods
and services is exclude from the 'net sales' amount in the accompanying
statements. In addition, consumption taxes borne by the Company on expenses
and the purchase of goods and services are excluded from these figures.
(6) Non-contributory funded severance and retirement plan
Konami and all domestic subsidiaries adopted the non-contributory funded
severance and retirement plan as from March 1, 1988. At March 31, 2000, the fund
assets of the plan amounted to Y1,328 million, and the unrecognized prior
service cost were amortized at 5 years and 10 months
(7) Lease transactions
Finance lease transactions other than those in which official ownership
of leased equipment is transferred to the lessee are based on accounting methods
for operating lease transactions.
5. Evaluation method of subsidiaires' assets and liabilities
The assets and liabilities of subsidiaries are evaluated under current
value.
6. Amortization
The difference between the cost and underlying net equity of investments
in subsidiaries at acquisition is amortized on a straight-line basis over five
years or if not significant in amount, such difference is charged to income when
incurred.
7. Elimination of unrealized gain/loss
All unrealized gains and losses incurred as the result of the sales and/or
purchase of assets between consolidated companies are eliminated. In case that
unrealized gains/losses included in depreciable assets, the depreciation amount
is revised in accordance with the elimination.
8. Appropriation of retained earnings
The consolidated statement of Appropriation of Retained Earnings is prepared
based on the income/loss to be disposed of as decided during the fiscal year.
9. Consolidated cash flow statements
All cash and cash equivalents included in the Consolidated cash flow are
short-term investments, which are considered as all time deposits that have
original maturities of three months or less and can be withdrawn on demand with
no diminution of principal.
(Additional information)
1. Effected April 1, 1999, the new accounting standards,'Accounting for
In-house software'was introduced..
Under the new standards, In-house software, which was previously included in
'Long-term prepaid expenses', is reclassified in 'In-house software' under
Intangible fixed assets from the year under review.
Such 'In-house software'is depreciated under straight-line method over 5 years.
2. Effected by the change of Accounting Policies and Regulations, Konami has
adopted the Tax allocation from the year under review. In line with this change,
'Deferred tax assets' were Y4,270 million (Y2,206 million under Current assets
and Y2,064 million under Investments and other assets), and 'Net income' and
'Retained earnings at end of year' were Y782 million and Y4,230 million higher,
respectively, than would have been the case under accounting methods used
previously.
Notes:
Consolidated Balance Sheets
(Millions of yen)
March 31,2000 March 31,1999
(1) Accumulated depreciation of
tangible fixed assets 11,699 13,260
(2) Major assets to affiliated companies
Investment securities (stocks) 165 51
Accounting for leases
Finance leases transactions other than those in which official ownership
of leased equipment is transferred to the lessee.
(1) Acquisition cost equivalent, accumulated depreciation equivalent, and
year-end balance equivalent
(Millions of yen)
March 31, 2000 March 31, 1999
Acquisition Accumulated Acquisition Accumulated
cost depreciation Balance cost depreciation Balance
equivalent equivalent equivalent equivalent equivalent equivalent
Tools and
fixtures 5,181 2,760 2,420 4,077 1,557 2,519
Total 5,181 2,760 2,420 4,077 1,557 2,519
(2) Obligation under finance lease at year-end, disbursement lease amount, and
depreciation equivalent
(Millions of yen)
March 31, 2000 March 31, 1999
Obligation under finance leases at year-end
Due within 1 year 1,318 1,200
Due after 1 year 1,102 1,319
Total 2,420 2,519
Disbursement lease amount 1,316 1,159
Depreciation equivalent 1,316 1,159
Notes: 1. Since the total value of unexpired leases at year-end occupies only
a small share of the year-end value of tangible fixed assets,
acquisition cost and total value of unexpired leases at year-end are
calculated inclusive of interest.
2. Method of calculating depreciation expenses:
Calculated according to the straight-line method whereby the
lease period is computed as useful life and the remaining payment
amount is computed as zero
Tax allocation:
The significant components of the deferred tax assets and liabilities at March
31, 2000 were as follows:
(millions of yen)
Fiscal 2000
Deferred tax assets
Unrealized holding gains on fixed assets and other 1,520
Accrued enterprises taxes 1,042
Allowance for directors' retirement benefits 624
Inventories 524
Accrued expenses 494
Other 358
Total 4,562
Less - Valuation allowance -113
Total deferred tax assets 4,449
Deferred tax liabilities
Reversal of reserve for fixed asset reduction
following adoption of tax allocation -158
Other -20
Total deferred tax liabilities -178
Deferred tax assets - net 4,270
5. Segment information
(1) Operations in Different Divisions
1. Sales and operating income
Year ended March 31, 2000
Millions of yen
Consumer-Use Amusement Game Pachinko Creative
Software Machines Machines Systems Products
Net sales:
To customers Y61,264 Y25,334 Y12,988 Y13,178 Y27,820
Intersegment 1,012 197 320 - 164
Total 62,277 25,532 13,309 13,178 27,985
Operating
expenses 46,812 20,309 12,218 10,055 16,921
Operating
income 15,464 5,222 1,091 3,123 11,064
Millions of yen
Eliminations
Amusement and
Operations Finance Other Total Corporate
Net sales:
To customers Y 4,503 Y 69 Y 1,505 Y146,666 -
Intersegment - 171 2,730 4,596 ( 4,596)
Total 4,503 240 4,235 151,263 ( 4,596)
Operating
expenses 4,486 223 3,856 114,884 843
Operating
income 17 16 378 36,379 ( 5,440)
Millions of yen
Consolidated
Net sales:
To customers Y146,666
Intersegment -
Total 146,666
Operating
expenses 115,727
Operating
income 30,938
2. Assets, depreciation and capital expenditures
Year ended March 31, 2000 Millions of yen
Consumer-Use Amusement Game Pachinko Creative
Software Machines Machines Systems Products
Assets 32,868 10,206 15,286 7,402 6,607
Depreciation 869 388 407 83 60
Capital
expenditures 1,644 113 148 24 40
Millions of yen
Eliminations
Amusement and
Operations Finance Other Total Corporate
Assets 4,482 13,598 19,965 110,417 25,662
Depreciation 149 0 210 2,170 307
Capital
expenditures 57 0 377 2,407 727
Millions of yen
Consolidated
Assets 136,080
Depreciation 2,477
Capital
expenditures 3,134
1. Sales and operating income
Year ended March 31, 1999 Millions of yen
Consumer-Use Amusement Game Pachinko Creative
Software Machines Machines Systems Products
Net sales:
To customers Y62,746 Y10,214 Y13,312 Y10,867 Y 9,229
Intersegment 182 262 439 - 67
Total 62,928 10,476 13,751 10,867 9,296
Operating
expenses 48,726 10,611 12,580 8,451 6,805
Operating
income (loss) 14,202 -134 1,171 2,416 2,490
1. Sales and operating income
Year ended March 31, 1999 Millions of yen
Eliminations
Amusement and
Operations Finance Other Total Corporate
Net sales:
To customers Y 4,428 Y 222 Y 2,392 Y113,413 -
Intersegment - 123 3,450 4,525 ( 4,525)
Total 4,428 346 5,842 117,939 ( 4,525)
Operating
expenses 4,623 260 5,061 97,119 (441)
Operating
income (loss) -194 85 781 20,189 ( 4,084)
1. Sales and operating income
Year ended March 31, 1999 Millions of yen
Consolidated
Net sales:
To customers Y113,413
Intersegment -
Total 113,413
Operating
expenses 96,678
Operating
income (loss) 16,735
2. Assets, depreciation and capital expenditures
Year ended March 31, 1999 Millions of yen
Consumer-Use Amusement Game Pachinko Creative
Software Machines Machines Systems Products
Assets 34,497 11,388 10,826 6,703 5,953
Depreciation 937 514 447 125 44
Capital
expenditures 494 89 160 65 94
2. Assets, depreciation and capital expenditures
Year ended March 31, 1999 Millions of yen
Eliminations
Amusement and
Operations Finance Other Total Corporate
Assets 4,505 11,473 8,853 94,201 23,182
Depreciation 153 0 177 2,399 431
Capital
expenditures 256 0 315 1,477 266
2. Assets, depreciation and capital expenditures
Year ended March 31, 1999 Millions of yen
Consolidated
Assets 117,383
Depreciation 2,830
Capital
expenditures 1,743
Notes: 1. Business divisions are determined by the internal management,
on a basis of the similarities in the type, nature and production
methods of their products. The major products and services of each
division are defined as follows:
Consumer-Use Software: Software for PlayStation, Nintendo 64,
Game Boy and Dreamcast;
Software for download by cellular phone
Amusement Machines: Coin-operated game machines for amusement
operations;
Dance-simulation, music-simulation game
machines;
Disc jockey-simulation game machines
(previous Game Machines Division, Note 2);
Software with LCD units for pachinko game
machine makers (previous Pachinko
Systems Division, Note 3)
Game Machines: Token-operated game machines for amusement
operations;
Components for video slot machines for
Casino;
Pachinko slot machines (previous Pachinko
Systems Division, Note 3)
Creative Products: Card games; character goods; portable
games; procurement and distribution of
home use game software created by other
companies
Amusement Operations: Operations of amusement centers
2. As from March 31, 2000, the operations of manufacturing the disc
jockey-simulation and music-simulation game machines of Game
Machines Division were transferred to Amusement Machines Division.
The result of these operations in the year under review were
included in the Game Machines Division.
3. As from March 31, 2000, the operations of manufacturing the software
with LCD units of Pachinko Systems Divisions were transferred to
Amusement Machines Division, and the operations of manufacturing
pachinko slot machines of this division were transferred to Game
Machines Division. The result of these operations in the year
under review were included in the Pachinko Systems Division.
4. Unallocated operating expenses in the Eliminations and Corporate
column, mainly consisting of the administrative expenses of the
Company, amounted to Y6,822 million and Y3,735 million for the
year ended March 31, 2000 and 1999, respectively.
5. Assets in the Eliminations and Corporate column, mainly consisting of
cash and cash equivalents, investment securities and administrative
assets of the Company, amounted to Y52,090 million and Y29,357
million as of March 31,2000 and 1999, respectively.
(2) Operations by Regions
Millions of yen
Year ended March 31,2000 Japan America Europe Asia Total
Net sales:
To customers Y123,275 Y 11,827 Y 9,265 Y 2,297 Y146,666
Intersegment 15,987 615 2 121 16,725
Total 139,262 12,442 9,267 2,418 163,391
Operating expenses 100,824 13,444 8,999 2,082 125,349
operating income(loss) 38,438 -1,002 268 336 38,042
Assets 80,984 7,505 6,238 696 95,423
(2) Operations by Regions
Millions of yen
Year ended March 31,2000 Eliminations
and
Corporate Consolidated
Net sales:
To customers - Y 146,666
Intersegment (16,725) -
Total (16,725) 146,666
Operating expenses ( 9,622) 115,727
operating income(loss) ( 7,103) 30,938
Assets 40,657 136,080
(2) Operations by Regions
Millions of yen
North
Year ended March 31,1999 Japan America Europe Asia Total
Net sales:
To customers Y 84,032 Y 14,633 Y 13,226 Y 1,520 Y113,413
Intersegment 19,200 39 10 36 19,286
Total 103,233 14,673 13,236 1,557 132,700
Operating expenses 82,604 14,592 12,634 1,638 111,469
operating income(loss) 20,628 81 602 -81 21,231
Assets 82,104 8,173 7,863 533 98,674
(2) Operations by Regions
Millions of yen
Year ended March 31,1999 Eliminations
and
Corporate Consolidated
Net sales:
To customers Y - Y113,413
Intersegment (19,286) -
Total (19,286) 113,413
Operating expenses (14,790) 96,678
operating income(loss) (4,495) 16,735
Assets 18,708 117,383
Notes: 1. Regions are categorized by geographical proximity.
2. The operations by regions are summarized in three segments
(except Japan) by geographical area based on the countries in which
they are located. The overseas segments consisted of the following
countries:
For the fiscal year ended March 31, 2000:
America: United States of America, Brazil
Europe: United Kingdom, Gemany, France
Asia: Hong Kong, Singapore, Republic of Korea
For the fiscal year ended March 31, 1999:
North America: United States of America
Europe: United Kingdom, Germany, France
Asia: Hong Kong Singapore, Republic of Korea
3. Unallocated operating rises in the Eliminations and Corporate column,
mainly consisting of the administrative expenses of the Company,
amounted to Y6,822 million and Y3,735 million for the year ended March
31, 2000 and 1999 respectively.
4. Assets in the Eliminations and Corporate column, mainly consisting of
cash and cash equivalents, investment securities and administrative
assets of the Company, amounted to Y52,090 million and Y29,357 million
as of March 31, 2000 and 1999, respectively.
(3) Overseas Sales
Millions of yen
Year ended March 31,2000 America Europe Other Total
Overseas sales (A) Y 12,586 Y 8,582 Y 6,679 Y 27,848
Consolidated sales (B) - - - 146,666
(A)/(B) 8.6% 5.8% 4.6% 19.0%
Millions of yen
North
Year ended March 31, 1999 America Europe Other Total
Overseas sales (A) Y 14,814 Y 13,221 Y 3,402 Y 31,438
Consolidated sales (B) - - - 113,413
(A)/(B) 13.0% 11.7% 3.0% 27.7%
Notes: 1. Regions are categorized by geographical proximity.
2. The overseas sales are summarized in three segments by geographic
area on the countries in which they are located. The overseas
segments consisted of the following countries:
For the fiscal year ended March 31, 2000:
America: United States of America, Canada, Brazil, others
Europe: United Kingdom, Germany, France, others
Other: HongKong, Singapore, Australia, others
For the fiscal year ended March 31, 1999:
North America: United States of America, Canada, others
Europe: United Kingdom, Germany, France, others
Other: HongKong, Singapore, Australia, Brazil, others
3. Overseas sales consist of the sales of Konami and consolidated
companies outside Japan.
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